From Usha Martin to Surya Roshni, five interesting stocks to ponder about

It is examination time, studying results of companies, closing one’s eyes, dreaming things that may happen and hollering ‘Get me my broker!’ to an alarmed receptionist.
 
This is what I have to show for my studies:
 
Usha Martin: They said there was no hope for this company with a mountain of debt on its book. EBIT (earnings before interest and tax) strengthened from Rs 15 million in Q4 FY17 to Rs 1.55 billion in Q4 FY18; after a number of quarters of losses, the company has reported a clean net profit. I would wait for two signals before making any pronouncement: whether this improvement can be sustained into the first quarter of 2018-19 and whether any interest rate restructuring can be attempted to accelerate the recovery.

 

Ester Industries: This is where it gets interesting because, after a number of quarters of net losses, the company scraped through a profit in the December quarter and an even bigger profit in Q4 2017-18, validating signs of a recovery. It is not just this turnaround but its vigour that excites. Consider the standalone bottom line sequence of the last five quarters: loss of Rs 7 million, loss of Rs 1 million, loss of Rs 6.6 million, profit of Rs 5 million and profit of Rs 56 million (note the difference). Expensive at a market cap of Rs 5.5 billion, so one will need to watch the next couple of quarters for revenue growth, interest outflow and margins and price steadiness makes it attractively priced.

 
Pitti Engineering: Relative under-performer for years. Suddenly, the company appears to be catching up with lost time: in the space of a quarter, EBIT more than doubled to Rs 147 million. Depreciation has increased so that could be indicative of capacity investment (and prospective revenue growth). The only worrying point is the sharp increase in interest outflow: from Rs 49 million in Q3 to Rs 89 million in Q4, which means the growth notwithstanding, interest cover is largely unchanged – even as the stock has run up to a market cap of Rs 2.85 billion.
 
Safari Industries: The company has been posting the kind of performance sequence that can convince any analyst that something credible is happening. Consider the standalone EBIT sequence: Rs 52 million, Rs 54 million, Rs 68 million, Rs 107 million and Rs 131 million,  which means that the company has more than doubled EBIT in the space of just five quarters. What makes this a compelling story is that interest cover was a stunning 20+ in Q4 2017-18, which is one reason why the company is valued at Rs 14 billion (a discounting in excess of 40, baap re).

 
Surya Roshni: I just love this company for the steadiness of its revenue growth (four of out of five sequential quarters) and the way EBIT has rebounded from a trough of Rs 488 million in Q1 of the last financial year to Rs 809 million in Q4. I would love to back this company at a market cap of Rs 20 billion at a time when there is interest growing in the consumer electricals space.
 
The author is a stock market writer, tracking corporate earnings and investor psychology to gauge where markets are not headed